Business & Market Intelligence

US Health Care Spending to Double to $4.1 Trillion by 2016 - 20 Cents of Every 5 Dollars Spent

U.S.
health care costs are set to double over the next 10 years to $4.1
trillion annually, or 1 dollar of every 5 dollars spent, according to a
study by Centers for Medicare & Medicaid Services, published today in
the Web edition of the journal Health Affairs.

The study estimates health spending in
2006 at $2.1 trillion or 16 cents of every dollar spent in the U.S.
economy (16% of the GDP). The new estimate is based on a 6.9% average
annual growth rate in health-care spending.

Other Highlights:

Medicaid spending is expected to reach
$313.5 billion in 2006, about the same as in 2005.

With the addition of Part D, total
Medicare spending growth is expected to reach $417.6 billion in 2006,
up from $342 billion the year before.

By 2016, Medicare spending is expected
to more than double, reaching $862.7 billion.

U.S. prescription drug spending should
reach $497.5 billion by 2016, more than double the expected level for
2006.

Prescription drug spending will grow
at an average annual rate of 8.6 percent until 2016.

The cost of hospital care is expected
to climb to more than $1.2 trillion by 2016, vs. $651.8 billion
expected for 2006.

In 2006, consumers are expected to
spend $250.6 billion in out-of-pocket health-care costs. The total
spent will reach $440.8 billion by 2016, however.

In 2006, an individual is projected to
spend $846.50 on health care. In 2016, the average spent will be
$1,405.73.

Private health insurance premiums are
expected to grow 4.4 percent in 2006, down from a high of 11 percent
in 2002.

Growth in total physician and clinical
spending is expected to slow from 7 percent in 2005, to 6.1 percent in
2006.

Growth in nursing home spending is
also expected to slow, from 6 percent in 2005 to 3.4 percent in
2006

Home health spending is likely to rise
1.4 percentage points to 12.5 percent in 2006, or $53.4 billion. This
would make it the fastest growing area of health care.